Starting out with medium multi-family property?

Question

Hello everyone.  I have been reading and listening to podcasts for a few weeks now, and looking at real estate deals online.  I am excited to get started, but I have a ton of questions!  My husband has started the process of getting his real estate license and we are  learning as much as possible before we get into it.  My big question for now is, "Is it a good idea to buy a 14-unit rental property as a brand new investor?" I was thinking about going for a business loan to finance and also paying a property manager.  I need to research all of the specifics first, and this obviously might not be "the one".  I'm just looking for pros and cons of starting out with something like this.  I think my market might be a little saturated with single family home buyers and investors, which is why I'm leaning toward the multi family niche.  I know I have a long way to go with analyzing this stuff.

Al Williamson · Answer

@Kristin Compton wow, you want to start big. I admire that -- but wouldn't recommend it. Everyone is different... and if you're already an accredited investor - go for it.

Yep, you'll find a big safety net of info here on BP. Enough expertise to give you the confidence that you can tackle just about anything.

I'll see you around in the forums. Best to you.

Kristin Compton · Answer

Sounds pretty awesome, Sue. I had planned on hiring a property manager and keeping my full time job. This particular property won't be the one for me. After speaking with one of the residents today I found out the rent amounts and the fact that some residents were getting kicked out.

I am pretty excited about how you all have been jumping at the chance to help me though. Thank you again!

Account Closed · Answer

Would you be managing it yourself?  Will you also have a full-time job?  Or will this building be your job?

Is there a manager in place?  A resident manager?

I'm asking questions from a manager's perspective.  If it's full of tenants who are paying and not causing problems, a transition will be pretty easy.  If not, you'll need a manager you can trust.  Taking on a mess of a building - management-wise - would be a huge challenge for someone with no management experience.

With a manager you can trust, even a mess of a place can be turned around in 6 months or less, if the area is desirable, in my opinion.

Kristin Compton · Answer

Thanks everyone.  I'll keep you updated on my next steps :)

Brandon Turner · Answer

Hey @Kristin Compton welcome to BP! I'm glad you're enjoying the podcast. You should definitely start jumping right in the forums! Also, if you haven't yet, try to setup some "Keyword Alerts." It's great for getting into local conversations.

Kristin Compton · Answer

Thank you, Dmitriy.  I am having a little trouble initially finding nearby investors using the BP meet link.  I even put within 100 miles and didn't get any results, which I know is wrong.  Do I have to put a title in that option box?  I'll keep trying on a different device maybe.  I do have keyword alerts set up, too!

Dmitriy Fomichenko · Answer

Welcome to BP family @Kristin Compton It is a great place to meet new friends and learn about various aspects of real estate and more. Here are a few recommendations for you:

Find and connect with other BP members that are in your area: http://www.biggerpockets.com/meet

Set up keyword alerts to be notified of the topics that interest you: http://www.biggerpockets.com/alerts

Wishing you the best!

Kristin Compton · Answer

Thank you for the reply and advice.  I have not  gotten all the information about this specific property.  I was just thinking about starting with something like this in general.  I will start analyzing more numbers on different properties when I get past the initial interest stage.

Brent Coombs · Answer

@Kristin Compton Welcome to BP! You said "this obviously might not be "the one"", but we all want to know what your analysis is telling you so far. What do the numbers look like (purchase price + rehab cost vs ARV, comps, gross rent per door per month, interest rate on mortgage)?

Then there are the esoteric considerations such as neighborhood, vacancy allowance, cap ex, and so on...

There is no reason why a new investor CAN'T get it right first time, but your Lender will want to be able to see that you have approached the matter equally as well as their seasoned investors.

Can we see those numbers, please? All the best...

Starting out with medium multi-family property?

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